ISSB Standards are designed to facilitate assurance and verifiability of sustainability-related financial disclosures, thereby helping to build investor confidence in the reported information. In developing the roadmap, a jurisdiction might need to consider whether the market is ready to deliver high-quality assurance of sustainability-related information. The jurisdiction would need to make decisions related to:

• the nature and timing of requirements to submit sustainability-related disclosures for third-party assurance;
• the availability and application of assurance standards and guidance; and
• access to and regulation of high-quality assurance providers.

A jurisdiction’s legal or regulatory framework might already require assurance of financial statements prepared in accordance with IFRS Accounting Standards or other generally accepted accounting principles. The existing framework and infrastructure might provide a starting point for assurance of sustainability-related information.

In building a roadmap, a jurisdiction might also consider the quality of sustainability-related assurance. Jurisdictions that have been applying other sources of guidance such as the Integrated Reporting Framework may have built expertise in sustainability-related assurance over time (if assurance was required, or entities elected to obtain assurance over their reports). Assurance providers might also have access to resources external to the jurisdiction that could increase jurisdictional expertise.

The jurisdiction would need to assess the applicability of available assurance frameworks for sustainability-related disclosures to support the assurance providers’ work. The International Auditing and Assurance Standards Board (IAASB) has published the International Standard on Sustainability Assurance 5000, General Requirements for Sustainability Assurance Engagements. The profession-agnostic assurance standard serves as a comprehensive, standalone standard suitable for any sustainability assurance engagement. The jurisdiction might need to consider which types of assurance providers are permitted to carry out third-party assurance over sustainability-related disclosures. It might also need to put in place a regulatory framework to oversee the quality and independence of the work of assurance providers and to enforce the assurance requirements. The International Ethics Standards Board for Accountants (IESBA) has also published the International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA). The IESSA provides ethics and independence standards for use and implementation by all sustainability assurance practitioners.

In summary, a jurisdiction might need to consider:

• whether a legal or regulatory framework for assurance is already in place, including in relation to sustainability-related information, or whether new requirements for third-party assurance will be introduced;
• whether the jurisdiction has access to expertise in relation to sustainability-related assurance and organised professional bodies;
• which sustainability-related assurance standards or framework will be applied;
• whether requirements on assurance of sustainability-related information will be phased in for publicly accountable entities and other entities at different times;
• what level and scope of assurance will be required—that is, limited assurance, or reasonable assurance—and whether the level and scope of assurance will be enhanced over time;
• how sustainability-related assurance engagements and practitioners will be supervised; and
• whether professional bodies will be able to build up capacity and provide ongoing professional development tools to sustainability-related assurance professionals.

Confidence in a jurisdiction’s corporate reporting system rests on the standards that govern reporting and on the perceived quality of (regulatory) enforcement. To effectively execute a roadmap, a jurisdiction should have institutional arrangements in place for effective supervision and enforcement.

In the early stages of implementing sustainability-related disclosures, entities will gradually deepen their understanding of the application of the requirements (or standards). Although entities will need to observe and comply with the corresponding sustainability-related disclosure obligations, it is also anticipated that entities’ disclosures will improve over time as they build resources and capacity, and gain access to better data and information—including across their value chain. Against this backdrop, it might be counterproductive for a jurisdiction to introduce rigorous enforcement mechanisms prematurely. A proportionate and graduated supervisory approach might help to encourage and accelerate improvements in the quality and consistency of disclosures. For instance, this might start with open dialogue between entities and regulators about regulatory expectations, challenges in meeting particular requirements, and areas for further focus and enhancement. Such a dialogue might be guided by a well-articulated surveillance programme with outward transparency to ensure investors understand the state of reporting.

The supervisory and enforcement expertise of the relevant regulatory authorities in relation to sustainability-related requirements will be vital to determine an effective supervisory and enforcement regime. Supervisors and enforcers may therefore use any transition period ahead of the date of application of sustainability-related disclosure requirements to build up the required competencies, skills, expertise and resources. The Outline describes the areas in which the IFRS Foundation intends to explore providing support to regulators and other relevant authorities as they introduce sustainability-related disclosure requirements within their jurisdictions. Regulators and other relevant authorities who want to get started on their capacity- building journeys can already refer to existing resources. These include the FSA Credential®, IFRS Foundation educational materials and other IFRS-partner-produced educational content.

The IFRS Foundation is making resources available that many jurisdictions might find helpful, including the knowledge hub, which brings together content produced by the IFRS Foundation and others. The IFRS Foundation expects these resources will help entities to get started when ISSB Standards are adopted or otherwise used in their jurisdictions.

Regulators and relevant authorities will need to determine which institutions will provide supervision and enforcement over sustainability-related disclosures. In some instances, the legal framework may clearly establish the authority or authorities supervising and enforcing requirements regarding financial statements. These might also be the appropriate authorities for supervision and enforcement of sustainability-related financial disclosure requirements.

In summary, a jurisdiction might need to consider:

• whether the supervision and enforcement of sustainability-related financial reporting has the same legal requirements as that of traditional financial reporting requirements and, if not, who will provide supervision and enforcement;
• how the authority providing supervision and enforcement will build capacity internally, and whether it will have a role in building capacity for preparers, assurers and users of sustainability-related disclosures; and
• whether non-compliance enforcement measures will be applied over time or at a point in time.

The roadmap and regulatory framework a jurisdiction develops to adopt sustainability-related disclosure requirements in a jurisdiction should consider whether it is appropriate and consistent with the jurisdiction’s overall regulatory approach to provide safe harbours for particular aspects of sustainability-related disclosures. For example, various disclosures required by IFRS S1 and IFRS S2 require the use of assumptions and forward-looking information. Providing clarity for supervisors, preparers and users of disclosures about the supervisory and enforcement approach provides more certainty. 

Adopting or otherwise using ISSB Standards might require highly specialised and technical human resources as well as suitable data collection systems. Access to those resources— whether through recruitment or training of staff or through access to external specialists—might be especially challenging in developing economies and for entities without public accountability.

As ISSB Standards are adopted or otherwise used globally, the number of local professionals who know and understand ISSB Standards is expected to increase. This increase in expertise is expected to occur even in jurisdictions that have not adopted or otherwise used ISSB Standards because domestic entities might apply ISSB Standards to prepare general purpose financial reports for use in security offerings locally or elsewhere, as part of their supply chain relationships or to report to foreign parent entities or investors. Knowing the local circumstances is the first step towards identifying the resources necessary in a jurisdiction for the adoption process.

Jurisdictions new to sustainability-related disclosure requirements might wish to take steps to build expertise within the jurisdiction among preparers, assurers, regulators and investors. The date when requirements become effective in the jurisdiction and any transition reliefs established by a jurisdiction may be linked to the jurisdiction’s commitment or plans to build expertise within the jurisdiction before fully mandating sustainability-related disclosure requirements.

Building capacity to adopt or otherwise use ISSB Standards is not limited to entities, investors and assurance providers. The capacity of securities and prudential regulators also needs to be considered. The IFRS Foundation is supporting adoption or other use of ISSB Standards by jurisdictions and implementation of ISSB Standards by entities through its Partnership Framework for Capacity Building. It is also working with other organisations that can help to support adoption, such as:

• local and regional development banks;
• regional standard-setting groups; and
• professional and standard-setting bodies.

With the Regulatory Implementation Programme, the IFRS Foundation, in collaboration with its partners, intends to provide practical tools, educational material and capacity building to support regulators and other relevant authorities as they work to adopt or otherwise use ISSB Standards. The programme will complement capacity-building, educational and other supporting materials made available by the IFRS Foundation and the ISSB to support the use of ISSB Standards. Through a related effort, the ISSB is collaborating on capacity-building efforts through IOSCO’s Growth and Emerging Markets Committee Network for Adoption or Other Use of ISSB Standards. Launched in December 2024, the network supports its members during their consideration of the adoption and other use of ISSB Standards.

Digital financial reporting allows investors and other users of that information to efficiently search, extract and compare entities’ accounting and sustainability-related disclosures at scale. It can improve capital market transparency and efficiency, promoting capital formation, including foreign investment, and enabling entities to raise capital at a lower cost.

Today, many investors, companies and regulators are already receiving the benefits. More than 90% of listed entities (by global market capitalisation) are required to carry out digital financial reporting to some extent. Digital financial reporting is increasingly being implemented by jurisdictions around the world.

The IFRS digital taxonomies facilitate the reporting of information prepared in accordance with IFRS Standards in a computer-readable structured data format (such as eXtensible Business Reporting Language (XBRL) or Inline XBRL (iXBRL)).

The IFRS Sustainability Disclosure Taxonomy (ISSB Taxonomy) facilitates the digital reporting of sustainability-related financial information prepared using ISSB Standards—including climate- related information. The publication of the ISSB Taxonomy delivers on the ISSB’s promise to enable investors and other capital providers to analyse sustainability-related financial disclosures efficiently in a digital format. By enabling the digital collection, aggregation, comparison and analysis of sustainability-related financial information, digital reporting is expected to benefit a range of stakeholders, including those operating in developing and emerging economies by making it easier to gather and assess data from these markets.

Benefits of the ISSB Taxonomy for stakeholders

Investors

• Automated data collection and reduced search costs
• More efficient information processing
• Reduced information asymmetry 
• Expanded population of possible investment targets

Companies

• Increased analyst coverage and access to capital, including foreign investment, leading to reduced cost of capital for companies
• More efficient and accurate benchmarking and peer analysis
• Reduced need to submit the same information to more than one government agency
  

Regulators and policymakers

• More efficient and effective market oversight activities and enforcement reviews
• Automated validation checks and technology-driven monitoring
• Improved data sharing between regulators and government agencies

Assurance providers

• Automated validation checks
• More efficient audit processes

In addition to these benefits, digital reporting of sustainability-related financial information is also expected to facilitate the democratisation of access to that information for all stakeholders, including those with fewer resources.

The ISSB Taxonomy reflects IFRS S1, IFRS S2 and the related accompanying guidance. The ISSB Taxonomy neither introduces new requirements nor affects an entity’s compliance with the ISSB Standards.

Designed to be compatible with the IFRS Accounting Taxonomy, so that entities can use both IFRS digital taxonomies together to provide a holistic digital financial reporting package to investors. The ISSB Taxonomy can also be used with other digital taxonomies, such as the SASB Standards Taxonomy.*

Role of jurisdictional authorities

Jurisdictions that consider adoption or other use of ISSB Standards are encouraged to consider the use of the ISSB Taxonomy to facilitate the digital reporting of sustainability-related financial information.

The use of the ISSB Taxonomy in conjunction with the ISSB Standards supports the provision of decision-useful, high-quality, globally comparable and accessible sustainability-related financial information in a digital format.

The ISSB Taxonomy can be implemented in a digital filing system in various ways. Implementing the ISSB Taxonomy in a manner that supports cross-border digital comparability and analysis of reported information will help to realise the full benefits of digital financial reporting.

The IFRS Foundation has published Using the IFRS digital taxonomies—A regulator’s guide, to assist regulators and digital filing system owners with implementing the IFRS digital taxonomies.

*IFRS S1 lists sources of guidance an entity is required or may consider using in preparing its sustainability-related financial disclosures in the absence of an IFRS Sustainability Disclosure Standard. If an entity uses a source of guidance described in IFRS S1, that entity should use a related taxonomy, if one exists, to tag information disclosed in accordance with that source of guidance. For example, if an entity uses the SASB Standards to disclose non-climate-related information described in the SASB Standards, that entity should use the SASB Standards Taxonomy to tag those disclosures prepared in accordance with the SASB Standards.